GM posts big drop in global sales; U.S. hit hardest

SAN FRANCISCO (MarketWatch) -- General Motors Corp. on Wednesday reported an 11.4% drop in third-quarter vehicle sales worldwide, with historic industry declines on its home turf and growing pressure in Europe offsetting strength in some emerging markets.

GM
GM, +0.91%
said it sold 2.11 million cars and trucks across the globe during the prior three months, down from 2.39 million in the same period last year. GM's overseas sales grew to 61% of the automaker's total unit sales, up from about 56% a year ago.

The shift reflects the persistent weakness in the U.S., where sales fell 18.9% as many beleaguered consumers were too busy grappling with the brutal economic climate to buy new cars.

Europe fared only slightly better with a 12.3% decline.

"The recent challenges in the global financial markets, including credit tightening and the drop in commodity prices, have negatively impacted market demand," said Jonathan Browning, head of GM's global sales, service and marketing division.

Still, Latin America, Africa and the Middle East region as well as Asia-Pacific delivered pockets of strength, up 3.4% and 2.6%, respectively.

The Cadillac brand saw double-digit sales gains in both regions, including a 39.2% pop in Asia-Pacific. That compares with the upscale brand's 28% drop in the U.S., where GM blamed the difficult financing environment in the luxury-vehicle segment.

Despite some highlights from around the world, GM is focusing on turning around business at home, where its October sales could be cut in half from a year ago, according to estimates from Deutsche Bank analyst Rod Lache.

He also forecast that the broader industry, which reports results on Nov. 3, is facing the prospects of a sales number last seen in the early 1980s.

"... just the cut in oil prices alone is going to tremendously help the budgets of Americans. It is essentially like a tax rebate."
Jonathan Browning, GM's VP of global sales, service and marketing

GM's Browning is hopeful the Detroit giant is about to turn a corner.

"So as we look around the world, we think that the U.S. is probably in its trough right now of the downturn, and this has been a very difficult quarter, and a difficult month, but ... just the cut in oil prices alone is going to tremendously help the budgets of Americans," he said in a conference call. "It is essentially like a tax rebate."

While GM workers on the front line toil to build sales, executives are still mulling a potential merger with Chrysler, with latest reports saying a deal may hinge on federal aid and could be hammered out before the presidential election on Nov. 4.

GM shares rose 8.2% to close at $6.76 but are still down 73% for the year.

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